📈 Stock Analysis: ADBE
Adobe Inc
Sector: Information Technology | Industry: Software
Market Cap: $ 141 Bn
Price: $ 343
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A+ Composite Grade
Composite Score: 95.00 (Percentile: 100.00%)
12 Month Price
Stock Grades
A+ MOAT
Adobe’s moat is built on its industry-standard creative software suite, including Photoshop, Illustrator, and Premiere Pro, which have become essential tools for professionals and enterprises. Its subscription-based model ensures strong recurring revenue and high switching costs, while its expansion into digital marketing and AI-driven tools strengthens its competitive position.
A FUNDAMENTALS
| Metric | Value | Check |
|---|---|---|
| Net Profit Margin | 26% | ✅ |
| EPS Growth (3Y | 5Y) | 7% | 16% | ✅ |
| Revenue Growth (3Y | 5Y) | 11% | 14% | ✅ |
| Forecasted EPS Growth (5Y) | 14% | ✅ |
| Forecasted Revenue Growth (1Y) | 5% |
A+ FINANCIAL
| Metric | Value | Check |
|---|---|---|
| ROE | 53% | ✅ |
| ROIC | 35% | ✅ |
| Debt/Equity | 0.53 | ✅ |
| Capital Allocation | Strong | ✅ |
A+ VALUATION
| Metric | Value | Check |
|---|---|---|
| Fair Value | 560 | ✅ |
| P/Earnings (TTM) | 21 | ✅ |
| P/Earnings Forecasted | 16 | ✅ |
| P/CashFlow | 22 | ❌ |
| PEG TTM | 1.55 | ❌ |
| Stock Buyback (5Y, 10Y) | 7%, 11% | ❌ |
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INVESTMENT COMMENTARY
Adobe Inc. (ADBE) stands out as a high-quality business with a wide economic moat and a resilient business model. Its dominance in creative software—anchored by household names like Photoshop, Illustrator, and Premiere Pro—creates high switching costs and entrenched user loyalty among professionals and enterprises. This strong product ecosystem, combined with a recurring-revenue subscription model, forms the backbone of Adobe's competitive advantage.
Financially, Adobe is a powerhouse, delivering excellent returns on equity (47%) and invested capital (34%), with a solid balance sheet and prudent capital allocation. Its fundamentals reflect a healthy, profitable company with consistent growth in earnings and revenue. Forecasted EPS growth of 13% over the next 5 years suggests continued momentum in profitability.
While Adobe trades at premium valuation multiples (P/E of 26, P/CF of 27, PEG TTM of 2.07), its fair value estimate of $590 points to long-term upside from its current price of $391. The company’s expansion into digital marketing and AI-enhanced creative tools further strengthens its strategic positioning and opens new growth avenues.
For long-term investors, Adobe offers a compelling combination of a durable moat, strong financial execution, and innovation-led growth. Though valuation is on the higher end today, Adobe remains a solid candidate for a buy-and-hold strategy, especially for those seeking exposure to high-quality tech franchises with staying power.